How to Buy Stocks Online

Study how to buy stocks online before you start putting money into the stock market. Internet stock trading is a good way to break into the stock market, because you’ll have access to handy resources through your online broker, along with whatever stock tracking you use from other electronic investment resources.

I suggest you start with a small investment in the stock market, before you jump in and risk a large percentage of your net wealth. Somewhere between $500 and $2000 is probably a good amount for most beginning investors. This lets you buy a number of stocks and understand the implications of gains and losses, but doesn’t expose you to ruin, as you continue to learn the stock market.

Buying Stocks Online

Buying stock online is going to be done through an online stockbroker firm, so it’s time to select your stock broker.

Choosing an Online Stockbroker

I’m not going to suggest any one online stockbroker company, because I don’t want to advertise for them. I’ll tell you the checklist you should use in finding your own stockbroker. You’re looking for proper e-resources to research stocks and stock trends, along with user-friendly software and reasonable trade fees. Find a company that gives you a comfortable mix of these, instead of finding the site with only the cheapest trade fees.

Resources you want to have at your handy disposal include educational tips and other materials, up-to-date stock news, software that’s easy to use and understand, solid general strategy advice and real-time charts of stock trends. You should be able to get a lot of your basic Dow Jones, NASDAQ and S&P information from your online stockbroker website.

Register and Fund Your Account

Registering with your online broker is going to be about like signing up any other online account. You’ll need to trust your online broker, because you’ll be transferring your money into this account. Add the proper funds into your online stock account, so you’ll have the money to make purchases.

Remember the basic assumptions of the stock market. When stocks go up, you make money. When they go down, you lose money. When you sell, you lock in profits or losses. This is real money, so don’t play the stock market like it’s a game.

Study the Market – Make Observations

How to Buy Stocks Online

Once you are in the market, study the market for a while before making a bunch of new purchases, or selling your stocks. Getting in and out of purchases quickly is going to make it hard to profit, because each new move is going to cost you a fee. You’ll want to have faith in the stocks you buy, assuming you’re original logic should hold.

In the early days of your investment in the stock market, you’ll probably make plenty of mistakes. So after studying the stock market for a while, you’ll probably want to trade out of some of your positions – possibly all of them. Don’t make this a habit in the long term.

When I say “study the market”, I mean that you should follow the up and down trends of individual stocks in the DOW, S&P and NASDAQ, while also studying how the general trends move. This takes a lifetime to master, but you can start to get a sense of what’s going on by studying the market.

Keep track of rally days and pull-backs, which are when stocks rally and drop, respectively. Notice how far the stocks tend to drop/rally in a day, how often they bounce back in the corresponding days and whether you can spot a trend or pattern in these seemingly random fluctuations. Read about the stocks in question, noticing patterns or developing theories, then read more to confirm or challenge these ideas you have.

Learn How to Limit Order

A “Limit Order” tells the brokerage at what prices you want to buy or sell a stock. This limits their flexibility in making orders for you, limiting the amount of money you spend on particular stocks to the limits you feel comfortable with.

A “Market Order” tells the brokerage to buy or sell your stock at the earliest possible convenience, at market price. The market order can be a lot more complicated than that, but it’s distinct from the limit order mentioned above. A limit order sets a limit on the time you execute a buy/sell order, or the price being sold, where the market order does not.

Wait a Few Days and See

Once you start buying stocks, keep checking your portfolio every day, to see whether your choices have succeeded. While it’s more interesting to buy and trade all the time, the safest return is to find stock that you think is undervalued and invest on the long-term likelihood that the stock is going to rise. There are plenty of reasons that stock might be undervalued, from a new company who’s time hasn’t come yet, but which has a good business model or product, to an established company that has had bad management, either increasing too fast or too slow, or otherwise not maximizing their potential.

Buy & Sell Stocks Online

The stock market is speculative, so not every investment is going to work the way you expected it to. Knowing when to buy & sell stocks online is a major concern of all investors, but if you find good investments and have faith in them, it’s usually best to stay in the position, unless your faith is shattered in them. Learning how to buy stocks online can be exhilarating or terrifying, because you have the ability to change you mind so quickly. So when learning to buy online stocks, also learn to maintain your patience and let your portfolio make money for you.